ZoneBitcoin EditorialYes, yet another new decentralized exchange platform? That said, this one, 1inch It also deserves a little description because its popularity is ever greater.
In fact, you should know that 1inch is above all an aggregator of decentralized exchanges. That is to say that the platform allows you to find cryptos (at the best prices) from all decentralized platforms. This is called a DEX aggregator (for Dcentralized Exchange). This is actually why many people use this platform.
1inch was created by two Russians Sergej Kunz and Anton Bukov in 2019 during the ETHNewYork hackathon. They subsequently raised more than $15 million from Binance Labs, Galaxy Digital and Pantera Capital.
During the month of January 2021, the platform's trading volume was over $155 million per day. That's how successful 1inch is.
So let's see here in this article how it works, concretely.
First of all, why are decentralized platforms gaining popularity?
The bottom line is that decentralized exchanges are cryptocurrency exchanges that do not require a third party to manage them. This is what we call "decentralized." There is no one person, group, or entity that will manage the order books or manage the funds as is the case with centralized platforms.
Typically, most of the time it is on centralized platforms like Binance that most crypto holders carry out their operations.
That said, in recent years, decentralized platforms have been gaining popularity. We can mention Uniswap for example, which continues to gain users.
The great advantage of DEXs is that you simply have to connect your wallet (for example Metamask) and you do not need to give your personal information. No need to send a KYC for example, for the simple reason that there is no central company that manages an exchange platform.
For people looking for anonymity in their use of cryptocurrencies, it's a huge advantage, you understand.
(We wrote an article on the difference between centralized and decentralized platforms If you want to know more, feel free to read it.)
Why is 1inch different from other platforms?
Please note that there are several exchange platforms such as Uniswap, Oasis or Kyber Network. Each of the platforms will have its own operation even if the principle remains the same; Namely trading cryptos.
That said, there are price differences between different platforms. This is what creates crazy opportunities for those who arbitrage.
For example, the prices of ETH or another ERC-20 token or another network could be different on Oasis than on Uniswap.
Add to this that the fees for each platform are different and more or less high.
And, this is where 1inch takes on its full meaning!
As indicated in the introduction, it is an aggregator which will display the best prices of cryptocurrencies which are available on decentralized exchanges. This is how we can see the price differences and choose the cheapest price! Think of it as a sort of price comparison tool, if you like.
This means that on 1inch, we will be able to have access to the best prices for cryptocurrencies from all exchange platforms. This is what makes 1inch so interesting.
Do you now understand why 1inch is so successful?
With the latest update of the platform (V2), 1inch was able to list up to 21 decentralized exchange platforms. We then have access to all prices in a single platform.
What is 1INCH token?
Exactly, on Christmas Day 2020, the 1inch platform launched its own token: the 1INCH token.
Classically, it is a “governance token” (governance token) that you can use on the platform. You can also vote on how the platform is run as well. This is what 1inch calls an “instant housekeeper” token ( instant governance).
It is also a utility token in the sense that you can use it on the platform itself as well.
There have been some very interesting crypto airdrops. To earn 1inch tokens, you had to provide liquidity before December 24. If you missed the event, tell yourself that it would be wise to register on crypto airdrop platforms so as not to miss anything in the future. Sometimes there are real opportunities to be seized.
You can also buy them on decentralized platforms or exchange them directly on 1inch.
Otherwise, don't worry, you can also earn it differently.
How to earn 1inch tokens?
Like many platforms, 1inch also launched its governance token: 1inch, in December 2020. Yes, it’s really recent!
To earn 1inch tokens (which continue to increase in value as the platform grows), you must participate in the platform.
The main method of earning money – as is often the case – is to provide liquidity to the platform.
Click on the “Earn” tab to get started. You can then provide liquidity from multiple pools such as Aave, Compound, Uniswap, Balancer, Mooniswap, etc.
To find out more, you can read the tutorial published on the 1inch Medium account to follow the steps to follow.
How to use the 1inch platform?
First, you obviously have to go to the official website of 1inch.
Next, you will need to have an Ethereum wallet on your browser. If this is not already the case, you can consult our tutorial to install MetaMask. Of course, you can opt for another wallet of your choice.
Also, you must have a provisioned wallet if you want to trade. For example, you can buy tokens on Binance and send them to your wallet addresses.
If you have your wallet installed and you have funds, you can click on “Connect wallet”. You will then land on this page.
You see that you are offered different types of wallets to connect. We have had Metamask for a long time and it is a recognized and reliable wallet. Again, you can also choose another.
Once your wallet is connected, we can get down to business and exchange our tokens.
In our case, we would like to exchange ETH for 1inch. We will therefore pay ETH to receive 1inch. Nothing too complicated.
In fact, what we need to look at is certainly the price but it is especially the associated "gas" fees. These are the network fees that we must pay to the Ethereum miners who will process our operations.
We remind you that sometimes the fees are very high (when the network is congested and many people are using it).
In our case, at the time we are doing this little tutorial, the costs are much too high. So we won't go all the way. We postpone until the next day.
Otherwise, when the fees are correct, you just have to click on "Swap Token" and validate.
It's good!
You did your swap correctly!
It is not more complicated on a centralized platform and you also have the choice between placing orders at the market price and with limit orders.
You can get the 1INCH token on major exchanges like Binance, KuCoin, Huobi Global, FTX and OKEx. Binance remains the largest marketplace for trading 1INCH (BTC/1INCH).
What are the fees on 1inch?
The 1inch exchange does not charge any withdrawal fees. The only fees are network fees charged by the exchange the user is routing through (e.g. Uniswap, Kyber Network, etc.), the amount of which depends on the gas price at the time the transaction is executed.
Since these fees are charged by the other exchange, 1inch does not benefit from these fees in any way. However, users have the opportunity to save on gas fees by using the Chi GasToken launched by 1inch.
What is Chi GasToken?
The Chi GasToken, known as “Chi,” was launched by 1inch in June 2020. So-called “gas” is similar to the fees that banks charge on money transfers, for example.
The only difference with DEXs is that you cannot predict the amount of fees. This fluctuates depending on the users. The more transactions to process, the more costs…
To reduce gas, 1inch created the ChiGasToken. However, note that the Chi is indexed to the price of network gas Ethereum.
So, if the price of gas is low, so will the Chi and vice versa.
The advantages and disadvantages of the 1inch platform?
For the advantages:
- The interface is quite pleasant and intuitive for clear use.
- There have been no hacking or hacking issues.
- The 1inch exchange does not charge any withdrawal fees except network fees.
- In fact, liquidity is a major problem on decentralized exchanges. This is even the biggest problem. Not only is liquidity low on DEXs in general, but this liquidity is still fragmented because there are multiple DEXs. They therefore share an already low liquidity. Eventually, 1inch solves this problem by splitting orders between DEXs.
- Chi GasTokens saves fees for everyday users.
- Their new Automated Market Maker (AMM) used in Mooniswap capitalizes on user slip-ups and protects traders against certain attacks.
For the cons:
- Even with the tutorials, it must be said that it can be complicated to fully understand and use all the features of 1inch.
- New investors and crypto beginners are not encouraged to trade on this platform as it does not accept any deposit methods other than cryptos. This means that you must first own cryptos.
We can see that overall, there are more advantages than disadvantages. This of course remains the opinion of the editorial team.
Maybe you will find other disadvantages?
Let us know !
Does the future of 1inch depend on the future of decentralized finance?
In fact, if a DEX like Uniswap as for example managed to be more important than all the others, then we would not see the interest of 1inch for example or any other aggregator.
This is what we need to understand.
There is an interest in comparative platforms only to the extent that there are several DEXs and therefore we need to make comparisons.
Likewise, this indirectly solves the liquidity problem, a real problem for DEXs. Moreover, this is what explains why the wrapped bitcoin (WBTC) was so expected.
As for 1inch, we can say that despite everything, it seems to be aimed at more experienced traders. In any case, those who are used to trading on DEXs.
We can think that 1inch will be one of the biggest platforms in the end. Finally, it is recent and it is enjoying ever greater success. So we can really think so.
Also, 1inch is a non-custodial DEX aggregator. This means that your cryptos are not owned or stored within the platform at any time, unlike some centralized exchanges where your cryptos are stored in their wallets.
It's also worth noting that 1inch has never had any hacking issues or security breaches. That’s already a big point and a big advantage.
However, regarding the actual future of 1inch, what we can say is that it actually depends on the future of decentralized exchanges.
For the moment, DEXs remain more expensive (in terms of fees), slower and do not have a large volume and therefore low liquidity compared to CEXs.
We can clearly see that centralized platforms like binance are literally exploding in terms of volume and number of users. However, if these platforms lose popularity, it is widely believed that DEX aggregators like 1inch will take over.
In any case, we are waiting for version 3, so that exchanges will be more efficient and above all a little less expensive.
That's all about 1inch, we hope this has helped you see more clearly on this platform..Who knows? The next DEX unicorn?
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Please note: Like all articles on this blog, this is not financial advice but simply information to help you better understand the world of cryptocurrencies.
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